Legislature(2019 - 2020)BARNES 124

03/19/2019 01:30 PM TRANSPORTATION

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Audio Topic
01:33:45 PM Start
01:34:14 PM Presentation(s): Economic Value & Impact of Alaska's Ports by the Ports of Whittier, Seward, & Anchorage
02:51:00 PM Presentation: Importance of Amhs to the Port of Bellingham
03:01:04 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+ Presentations: TELECONFERENCED
- Economic Value & Impact of Alaska's Ports by
the Ports of Whittier, Seward, & Anchorage
-- Testimony <Invitation Only> --
- Importance of AMHS to the Port of Bellingham
by Rob Fix, Exec. Dir., Port of Bellingham
                    ALASKA STATE LEGISLATURE                                                                                  
            HOUSE TRANSPORTATION STANDING COMMITTEE                                                                           
                         March 19, 2019                                                                                         
                           1:33 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Louise Stutes, Co-Chair                                                                                          
Representative Adam Wool, Co-Chair                                                                                              
Representative Matt Claman                                                                                                      
Representative Harriet Drummond                                                                                                 
Representative Andi Story                                                                                                       
Representative Sara Rasmussen                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Dave Talerico                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION(S): ECONOMIC VALUE & IMPACT OF ALASKA'S PORTS BY                                                                   
THE PORTS OF WHITTIER, SEWARD, & ANCHORAGE                                                                                      
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PRESENTATION: IMPORTANCE OF AMHS TO THE PORT OF BELLINGHAM                                                                      
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JIM HUNT, City Manager                                                                                                          
City of Whittier                                                                                                                
Whittier, Alaska                                                                                                                
POSITION STATEMENT:  Presented on Whittier's potential as a                                                                   
major Alaskan port city.                                                                                                        
                                                                                                                                
BRENNAN HICKOK, Assistant City Manager                                                                                          
City of Seward                                                                                                                  
Seward, Alaska                                                                                                                  
POSITION STATEMENT:  Presented on Seward's ports, harbors, and                                                                
docks.                                                                                                                          
                                                                                                                                
NORM REGIS, Harbormaster                                                                                                        
City of Seward                                                                                                                  
Seward, Alaska                                                                                                                  
POSITION STATEMENT:   Presented  on Seward's ports,  harbors, and                                                             
docks.                                                                                                                          
                                                                                                                                
JIM JAGER, Director of External Affairs                                                                                         
Port of Alaska                                                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Presented on the current state  of the Port                                                             
of Alaska as well as upcoming modernization efforts.                                                                            
                                                                                                                                
ROB FIX, Executive Director                                                                                                     
Port of Bellingham                                                                                                              
Bellingham, Washington                                                                                                          
POSITION STATEMENT:   Presented on  the importance of  the Alaska                                                             
Marine Highway System to the Port of Bellingham.                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:33:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  ADAM  WOOL  called the  House  Transportation  Standing                                                             
Committee  meeting  to  order  at   1:33  p.m.    Representatives                                                               
Drummond,  Rasmussen,  Claman,  Stutes,   Wool,  and  Story  were                                                               
present at the call to order.                                                                                                   
                                                                                                                                
^PRESENTATION(S): Economic  Value & Impact  of Alaska's  Ports by                                                               
the Ports of Whittier, Seward, & Anchorage                                                                                      
 PRESENTATION(S): Economic Value & Impact of Alaska's Ports by                                                              
           the Ports of Whittier, Seward, & Anchorage                                                                       
                                                                                                                                
1:34:14 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  announced that the  first order of  business would                                                               
be a  set of presentations  on the  economic value and  impact of                                                               
Alaska's ports,  including testimony from representatives  of the                                                               
Ports of Whittier, Seward, and Alaska [Anchorage].                                                                              
                                                                                                                                
1:34:49 PM                                                                                                                    
                                                                                                                                
JIM  HUNT,  City Manager,  City  of  Whittier, thanked  committee                                                               
members  for allowing  him to  testify on  the critical  issue of                                                               
ports in  Alaska.   He said  the City of  Whittier would  like to                                                               
express  its  support  for the  Alaska  Marine  Highway  [System]                                                               
(AMHS)  in  Whittier  and  Alaska.     He  noted  the  city  also                                                               
recognizes the  financial challenges  facing the State  of Alaska                                                               
(SOA).   He pitched the  idea of homeporting the  northern Prince                                                               
William Sound  ferry in Whittier,  arguing that it  would provide                                                               
more affordable  housing options for  crew, as well as  access to                                                               
the Seward Highway.                                                                                                             
                                                                                                                                
MR.  HUNT offered  details about  his  background, including  his                                                               
seven-year stint  as city  manager for  the City  of Seward.   He                                                               
noted  that  he is  an  accredited  marine  port executive.    He                                                               
discussed  his role  in developing  various  projects in  Seward,                                                               
including  the Seward  Marine Industrial  Center (SMIC),  the new                                                               
breakwater,  and the  replacement docks  in the  downtown harbor.                                                               
He said  the SMIC has  spurred economic growth and  has generated                                                               
millions of dollars in business  revenue, which he noted benefits                                                               
SOA as well as Seward.                                                                                                          
                                                                                                                                
MR. HUNT said his current challenge  as city manager for the City                                                               
of Whittier is to develop the  city to its fullest potential.  He                                                               
mentioned his intention for Whittier  to aid Alaska by serving as                                                               
a new  port site  and to be  identified as a  backup port  in the                                                               
event of  an emergency in Anchorage.   He noted that  Whittier is                                                               
located   on  the   northernmost  ice-free   deep-water  bay   in                                                               
Southcentral Alaska.  He said the  city is unique in that it owns                                                               
the surrounding  tidelands within its 17-mile  corporate boundary                                                               
area.  He  commented that the head  of the bay is  deep and would                                                               
require minimal initial dredging in  the event of development due                                                               
to the lack  of sedimentation on the  north side of the  bay.  He                                                               
added that  an existing  Alaska Railroad rail  spur runs  along a                                                               
road that terminates near the head of  the bay.  He said the city                                                               
has many acres available for development.                                                                                       
                                                                                                                                
MR. HUNT said the challenge for  Alaska's ports is to be prepared                                                               
for any  eventuality.  He opined  that this has been  ignored for                                                               
many years.   He said no one port can  provide the transportation                                                               
and freight security  needed by SOA.  He  asked committee members                                                               
to  recognize that.   He  requested that  the committee  consider                                                               
Whittier  as  a  viable  option   as  it  moves  forward  in  its                                                               
deliberations.                                                                                                                  
                                                                                                                                
1:38:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  thanked Mr. Hunt  for his presentation.   He asked                                                               
if the City of Whittier receives  state funding for its port and,                                                               
if so, how much and for what it is used.                                                                                        
                                                                                                                                
MR. HUNT  stated that the City  of Whittier has not  received any                                                               
state  funds  for port  improvement.    He  noted that  the  city                                                               
previously received  a $500,000  match grant  for its  small boat                                                               
harbor.                                                                                                                         
                                                                                                                                
1:39:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  WOOL  asked whether  the  port  receives much  freight,                                                               
given the  presence of the  railroad.  He recalled  hearing about                                                               
various  natural  resources  being  shipped  up  from  Canada  to                                                               
Whittier.                                                                                                                       
                                                                                                                                
MR. HUNT explained  that Alaska Marine Lines  (AML) partners with                                                               
the Alaska Railroad to transport  freight and hazardous materials                                                               
through  the middle  of the  city.   He  stated that  he sees  an                                                               
opportunity  for future  movement  toward a  partnership to  move                                                               
dangerous  materials the  north side  of  the bay  and away  from                                                               
Whittier's city center  and tourist district.  He  noted that the                                                               
City of Whittier is welcoming  larger cruise ships.  He expressed                                                               
concern  with  the hazardous  materials  issue,  but said  he  is                                                               
forced to accept it as the reality of "where we live right now."                                                                
                                                                                                                                
1:40:32 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  asked Mr.  Hunt to  clarify his  earlier statement                                                               
about Whittier potentially being a home port for the ferry.                                                                     
                                                                                                                                
MR.  HUNT  explained  that  Motor  Vessel  (M/V)  Aurora  is  not                                                               
currently homeported in Whittier.   He opined that doing so would                                                               
better  address housing  issues  than if  it  were homeported  in                                                               
Hoonah,  Cordova, or  Valdez.   He  said it  makes more  economic                                                               
sense for  the vessel and  its crew  to be stationed  in Whittier                                                               
because of the city's transportation and housing options.                                                                       
                                                                                                                                
1:41:43 PM                                                                                                                    
                                                                                                                                
CO-CHAIR STUTES asked if AML utilizes Whittier's port.                                                                          
                                                                                                                                
MR. HUNT  said AML  operates Whittier's  heavy freight  dock near                                                               
downtown  Whittier.   He  explained that  it  receives and  ships                                                               
heavy freight and materials there.                                                                                              
                                                                                                                                
CO-CHAIR  STUTES asked  whether any  other freight  lines utilize                                                               
Whittier's port.                                                                                                                
                                                                                                                                
MR. HUNT  said there  are smaller  barges that come  and go.   He                                                               
called the  area "a blank slate"  and reiterated that the  bay is                                                               
secure, deep-water, and accessible to tunnels and the highway.                                                                  
                                                                                                                                
1:42:56 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  WOOL  asked  Mr.  Hunt   to  identify  the  first  port                                                               
accessible to vessels that sail up through the Inside Passage.                                                                  
                                                                                                                                
MR.  HUNT  said that  run  usually  involves Valdez  and  Cordova                                                               
before completing the Northern Loop  across Prince William Sound.                                                               
He  confirmed  that  Whittier  is "the  western  gateway  to  the                                                               
sound."                                                                                                                         
                                                                                                                                
CO-CHAIR WOOL asked about Whittier's  history as a submarine base                                                               
during World War II.                                                                                                            
                                                                                                                                
MR.  HUNT quipped,  "Would that  be officially  or unofficially?"                                                               
He then  confirmed that  Whittier was  a port  for many  types of                                                               
vessels.                                                                                                                        
                                                                                                                                
CO-CHAIR WOOL thanked Mr. Hunt for his presentation.                                                                            
                                                                                                                                
1:44:28 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 1:44 p.m. to 1:47 p.m.                                                                       
                                                                                                                                
1:46:51 PM                                                                                                                    
                                                                                                                                
BRENNAN HICKOK, Assistant  City Manager, City of  Seward, began a                                                               
PowerPoint  presentation [hard  copy  included  in the  committee                                                               
packet] on  Seward's ports,  harbors, and docks.   He  noted that                                                               
there are  three different entities  that operate in the  City of                                                               
Seward:  The Seward Boat Harbor,  located on the west side of the                                                               
bay;  The Alaska  Railroad, which  operates the  Port of  Seward,                                                               
also located on  the west side of the bay;  and the Seward Marine                                                               
Industrial Center (SMIC), located on the east side of the bay.                                                                  
                                                                                                                                
MR.  HICKOK  addressed  slide  2,   titled  "Introduction."    He                                                               
explained  that  Seward  Township  was established  in  1903  and                                                               
became  an incorporated  city  in  1912.   He  said the  original                                                               
harbor was  located on  the central  coastline with  the railroad                                                               
facility  on the  south  end.   He relayed  that  the harbor  was                                                               
rebuilt in a  more appropriate location after  the 1964 location,                                                               
noting that the  new permanent location shielded  the harbor from                                                               
southern winds.   He said the Port of Seward  is connected to the                                                               
rest of  Alaska by rail, road,  and air.  He  listed distances in                                                               
roads and rail from Seward to  Anchorage and Fairbanks.  He added                                                               
that the port is deep-water and is free of ice year-round.                                                                      
                                                                                                                                
1:48:14 PM                                                                                                                    
                                                                                                                                
MR. HICKOK  addressed slide 3,  which featured a photo  of Seward                                                               
from June  1906.   He pointed  out the  railroad facility  at the                                                               
south end of town.                                                                                                              
                                                                                                                                
MR. HICKOK  addressed slide 4, which  featured another historical                                                               
photo.   He again  pointed out  the railroad  facility.   He also                                                               
pointed out  the original  harbor.  Responding  to a  question by                                                               
Co-Chair Wool,  Mr. Hickok  pointed out  the current  location of                                                               
the Seward Marine Center.                                                                                                       
                                                                                                                                
MR.  HICKOK   addressed  slide  5,   which  featured   an  aerial                                                               
photograph  taken in  1965 that  conveyed changes  made following                                                               
the  1964 earthquake,  which  washed away  much  of the  existing                                                               
infrastructure.   He  pointed  out the  new  harbor and  railroad                                                               
terminal.                                                                                                                       
                                                                                                                                
1:49:32 PM                                                                                                                    
                                                                                                                                
MR.  HICKOK addressed  slide 6  and stated  that Seward's  harbor                                                               
currently has 562 slips, 512 of  which have electricity.  He said                                                               
the harbor is  dredged to -15 feet [mean lower  low water] (MLLW)                                                               
and features  over 5,000  feet of linear  moorage.   He explained                                                               
that the slips range from 32 to  100 feet.  He also mentioned the                                                               
presence of two fish processing plants.                                                                                         
                                                                                                                                
CO-CHAIR STUTES asked for an explanation of MLLW.                                                                               
                                                                                                                                
1:50:00 PM                                                                                                                    
                                                                                                                                
NORM  REGIS,  Harbormaster, City  of  Seward,  explained that  it                                                               
stands for mean lower low water.                                                                                                
                                                                                                                                
MR. HICKOK  quipped that he also  had to look up  that definition                                                               
this morning.   He returned to  the topic of the  fish processing                                                               
plants  and noted  that they  process 27  million pounds  of fish                                                               
annually worth approximately  $42 million.  He  confirmed for Co-                                                               
Chair Wool that both plants are currently operating.                                                                            
                                                                                                                                
1:50:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  STORY asked  about the  demand for  the slips  in                                                               
Seward's harbor.                                                                                                                
                                                                                                                                
MR. REGIS said the demand  for the 32-foot slips is approximately                                                               
6 months.  He said the larger  slips range from two years to four                                                               
years.  He noted that there  are not many 90-foot slips and those                                                               
who use them tend to keep renewing them.                                                                                        
                                                                                                                                
1:51:00 PM                                                                                                                    
                                                                                                                                
MR.  HICKOK addressed  slide 7,  which featured  a recent  aerial                                                               
photo of  the Seward harbor.   He noted  that there are  very few                                                               
empty  slips.   He  pointed  out the  United  States Coast  Guard                                                               
Cutter (USCGC) Mustang.  He noted  that Seward will receive a new                                                               
fast  response cutter  in 2023.   He  said discussions  with USCG                                                               
about accommodating the new cutter are ongoing.                                                                                 
                                                                                                                                
MR.  HICKOK addressed  slide 8,  titled "Ongoing  Projects."   He                                                               
discussed  the  South  Harbor  Boat  Launch  rebuild,  which  was                                                               
financed  through a  $2.7 million  grant  that included  matching                                                               
funds from  the Alaska  Department of  Fish &  Game (ADF&G).   He                                                               
mentioned  the Upland  development  to accommodate  the new  USCG                                                               
Cutter, which  he said was  a $31 million appropriation  from the                                                               
federal government.   He said the city is seeking  to replace two                                                               
floats.   He shared  the city's intention  to construct  a 50-ton                                                               
travel lift washdown pad on the west side of the bay.                                                                           
                                                                                                                                
1:52:10 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL asked  what other state funding the  City of Seward                                                               
has received.                                                                                                                   
                                                                                                                                
MR. HICKOK said  SMIC received $29.5 million in  grants from SOA.                                                               
He clarified  that this included  two $10  million appropriations                                                               
and one $5.9 million appropriation.                                                                                             
                                                                                                                                
MR.  REGIS added  that the  city used  the Harbor  Facility Grant                                                               
program to  slowly rebuild its  small boat harbor.   He clarified                                                               
that the city must have  a shovel-ready project and money in-hand                                                               
before it goes to SOA for a 50  percent match.  He said the grant                                                               
program will hopefully continue.                                                                                                
                                                                                                                                
1:53:16 PM                                                                                                                    
                                                                                                                                
CO-CHAIR STUTES asked if there is a travel lift in Seward.                                                                      
                                                                                                                                
MR. HICKOK  said there is a  50-ton travel lift on  the west side                                                               
of the bay  in the harbor and  a 330-ton travel lift  on the east                                                               
side of the bay at SMIC.                                                                                                        
                                                                                                                                
MR. REGIS  noted that the city  does have a washdown  pad for the                                                               
330-ton travel  lift.  He  said the pad  was paid for  with Exxon                                                               
Valdez oil spill (EVOS) money.                                                                                                  
                                                                                                                                
1:53:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DRUMMOND asked  about the  Upland development  to                                                               
accommodate the USCG cutter.                                                                                                    
                                                                                                                                
MR.  HICKOK  explained  that  the   Upland  development  will  be                                                               
whatever  facilities  USCG  deems  necessary  for  its  new  fast                                                               
response cutter and  its support/maintenance team.   He said that                                                               
means a new  building and potentially a new dock.   He added that                                                               
it could  mean new development  if USCG  chooses to locate  it at                                                               
SMIC.                                                                                                                           
                                                                                                                                
1:54:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  STUTES asked  what the  largest vessel  is that  can be                                                               
serviced by the 330-ton lift.                                                                                                   
                                                                                                                                
MR. REGIS  said it has  lifted vessels that  are 145 to  150 feet                                                               
long.  He  noted that it is difficult to  turn when lifting ships                                                               
longer  than  that.    He  said  the  yard  is  large  enough  to                                                               
accommodate big vessels.                                                                                                        
                                                                                                                                
1:55:33 PM                                                                                                                    
                                                                                                                                
MR.  HICKOK  addressed slide  9,  which  featured another  aerial                                                               
photo of the harbor.                                                                                                            
                                                                                                                                
MR. HICKOK addressed  slide 10, titled "Seward's Port."   He said                                                               
the 328-acre port  is operated by the Alaska Railroad.   He added                                                               
that 75  of those acres  are dock facilities.   He said  the port                                                               
includes freight docks, passenger  docks, and a loading facility.                                                               
He noted that the loading facility  - largely used to export coal                                                               
  has  been inactive since  2016 due to  the decline of  the coal                                                               
market.  He mentioned that the  Alaska Railroad has said it could                                                               
swiftly revamp the facility should the market adjust itself.                                                                    
                                                                                                                                
1:56:26 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  STUTES asked  why  the  City of  Seward  decided it  no                                                               
longer wanted AMHS to dock there.                                                                                               
                                                                                                                                
MR. REGIS said  he believes AMHS pulled itself out.   He said the                                                               
city wanted to keep AMHS in Seward.                                                                                             
                                                                                                                                
CO-CHAIR WOOL asked  for confirmation that the  ferry in question                                                               
ran from Seward to Kodiak.                                                                                                      
                                                                                                                                
CO-CHAIR STUTES confirmed it.                                                                                                   
                                                                                                                                
REPRESENTATIVE STORY expressed  interest in obtaining information                                                               
pertaining to the decision to pull AMHS out of Seward.                                                                          
                                                                                                                                
1:57:14 PM                                                                                                                    
                                                                                                                                
MR.  HICKOK said  the Alaska  Railroad also  operates the  cruise                                                               
ship port.   He said 70  cruise ships visited Seward  in 2018 and                                                               
82 are scheduled to visit in 2019.   He said that amounts to more                                                               
than 200,000 cruise  ship customers annually.   He mentioned that                                                               
the port managed 4.29 million  tons of freight in 2015, servicing                                                               
40 different  freight customers.   He noted this the  number will                                                               
have dropped over the past four  years due to the shutdown of the                                                               
loading facility.   He confirmed  for Co-chair Wool that  most of                                                               
the freight being exported was coal.                                                                                            
                                                                                                                                
CO-CHAIR  WOOL asked  if Seward  also  takes in  freight that  is                                                               
transferred north via the railway.                                                                                              
                                                                                                                                
MR. HICKOK answered yes.                                                                                                        
                                                                                                                                
CO-CHAIR WOOL asked  if that freight is different  from what goes                                                               
into Whittier or Anchorage.                                                                                                     
                                                                                                                                
MR. HICKOK answered, "Not that I'm aware of."                                                                                   
                                                                                                                                
CO-CHAIR WOOL asked if some customers elect to use Seward                                                                       
over other ports.                                                                                                               
                                                                                                                                
MR. HICKOK  said yes.  He  noted that Seward is  the gateway                                                                    
to  the  Kenai  Peninsula,  so  some  shipping  options  are                                                                    
cheaper  to go  through  Seward if  the  destination is  the                                                                    
Kenai Peninsula.                                                                                                                
                                                                                                                                
1:58:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  STORY  asked  about fees  collected  or  economic                                                               
benefits gained by the city from  the cruise ships that visit the                                                               
port.                                                                                                                           
                                                                                                                                
MR. HICKOK stated that there  are several benefits, including the                                                               
5 percent head  tax and the economic activity  driven by tourists                                                               
spending  money.   He  noted  that Seward  is  a turnaround  port                                                               
rather than a port of  call, so many passengers immediately leave                                                               
Seward  by boarding  a train,  but  some cruise  ships remain  in                                                               
Seward  for 24  to 48  hours.   He  said the  economic impact  of                                                               
having those people in Seward is significant.                                                                                   
                                                                                                                                
MR. HICKOK  addressed slide  11, which featured  a photo  that he                                                               
said represents the  perfect usage of a port.   He noted that the                                                               
photo includes a  cruise ship, freight activity, and  a coal ship                                                               
being loaded.                                                                                                                   
                                                                                                                                
1:59:42 PM                                                                                                                    
                                                                                                                                
MR. HICKOK  addressed slide  12.   He described  SMIC as  a city-                                                               
operated entity  on the east side  of the bay.   He restated that                                                               
it has received three grants  from SOA since 2012, totaling $29.5                                                               
million.  He said SMIC has  over 1,000 feet of linear moorage and                                                               
a 430-foot  barge landing on the  north dock.  He  added that the                                                               
north dock is dredged  to -25 feet MLLW.  He  said the SMIC basin                                                               
is dredged to -21 feet MLLW.                                                                                                    
                                                                                                                                
MR. HICKOK addressed slide 13,  which featured an aerial photo of                                                               
SMIC.  He  pointed out the newly installed  breakwater, the north                                                               
dock, the  fisherman's float, a  fish processing plant,  the 330-                                                               
ton lift  pit, and a  syncrolift system,  which he said  can lift                                                               
5,000 tons.                                                                                                                     
                                                                                                                                
2:01:10 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL asked for confirmation  that SMIC is located on the                                                               
opposite side of the bay from the boat harbor.                                                                                  
                                                                                                                                
MR. HICKOK answered correct.                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  asked about the  kinds of activity that  happen at                                                               
SMIC.                                                                                                                           
                                                                                                                                
MR.  HICKOK said  there are  several  marine support  businesses,                                                               
including the large vessel maintenances  shipyard operated by JAG                                                               
Industrial  &  Marine  Services.   He  also  mentioned  Shoreside                                                               
Petroleum,  Inc.    He  said other  businesses there  handle fish                                                               
processing,  fiberglass work,  and boat  storage activities.   He                                                               
noted that the  area is very active in winter  and less active in                                                               
summer.  He  confirmed for Co-chair Wool that  there is currently                                                               
no rail access to SMIC and the east side of the bay.                                                                            
                                                                                                                                
MR. REGIS stated that Alaska  Vocational Technical Center (AVTEC)                                                               
has  a fire  training  center  at SMIC.    He  said various  fire                                                               
departments come to  Seward to take advantage of  the city's fire                                                               
training center.   He said  AVTEC also trains students  there who                                                               
are entering marine-related fields.                                                                                             
                                                                                                                                
2:02:43 PM                                                                                                                    
                                                                                                                                
MR. HICKOK stated that there is  a 10-ton crane located at SMIC's                                                               
north  dock, as  well  as 10  acres  of storage.    He said  SMIC                                                               
features an additional 25 acres  of upland storage.  He mentioned                                                               
the 5,000-ton syncrolift,  the 330-ton travel lift,  and the fish                                                               
processing plant.                                                                                                               
                                                                                                                                
MR. HICKOK addressed slide 15,  which featured an aerial photo of                                                               
SMIC facing  west.  He  pointed out an oil  rig that had  been in                                                               
Seward for a couple years.                                                                                                      
                                                                                                                                
CO-CHAIR  WOOL commented  that the  aerial photos  sometimes make                                                               
things  look  small,   but  the  oil  rig  allows   for  a  clear                                                               
understanding of the scale of SMIC.                                                                                             
                                                                                                                                
MR. HICKOK  identified in  the photo  the fish  processing plant,                                                               
330-ton  lift,  and  the  syncrolift.   He  said  the  syncrolift                                                               
operation is operated by JAG Industrial & Marine Services.                                                                      
                                                                                                                                
MR. HICKOK addressed slide 16,  which featured a list of industry                                                               
currently  at  SMIC.   He  noted  that  JAG Industrial  &  Marine                                                               
Services  is  currently   working  on  USCGC  Spar.     He  named                                                               
additional  companies:  Alaska  Logistics, which  repairs  marine                                                               
vessels;  Raibow Fiberglass  and Boat  Repair, LLC;  Exit Marine,                                                               
LLC, which  repairs marine vessels;  Hung Tough Nets,  LLC, which                                                               
repairs   fishing   nets;   AVTEC's   fire   training   facility;                                                               
Communications  North, a  communications installation  and repair                                                               
company;  Shoreside Petroleum,  Inc.; and  Polar Seafoods,  Inc.,                                                               
which operates out of the processing plant.                                                                                     
                                                                                                                                
2:04:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   DRUMMOND   pointed   out   that   Spring   Creek                                                               
Correctional Center is visible in the photo on slide 17.                                                                        
                                                                                                                                
MR. HICKOK confirmed that the  maximum-security prison is visible                                                               
at the top center of the photo.                                                                                                 
                                                                                                                                
2:05:03 PM                                                                                                                    
                                                                                                                                
MR. HICKOK  addressed slide  18.  He  discussed future  goals for                                                               
SMIC,  including  an intention  to  increase  cargo handling  and                                                               
capacity for Alaska-bound cargo.   He said discussions have begun                                                               
about a  rail extension to  connect SMIC to the  Alaska railroad.                                                               
He noted  that this would  put Seward at a  competitive advantage                                                               
as relates  to Alaska-bound cargo.   He said the city  would like                                                               
to  expand the  maritime  support service  businesses located  at                                                               
SMIC  as well  as maximize  SMIC's moorage  capacity.   He shared                                                               
that the city  has also discussed with USCG where  its new cutter                                                               
will go.  He  said one option is to have it  based at SMIC, which                                                               
would increase activity and infrastructure there.                                                                               
                                                                                                                                
2:05:50 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  WOOL asked  about  the advantages  of  SMIC versus  the                                                               
existing port on the west side of the bay.                                                                                      
                                                                                                                                
MR. HICKOK  said the railroad facility  [on the west side  of the                                                               
bay] is  better equipped to  manage large  amounts of cargo.   He                                                               
said SMIC  would require significant  investment to  increase its                                                               
cargo  activity and  expand  export/import  capabilities on  [the                                                               
east] side of the bay.                                                                                                          
                                                                                                                                
CO-CHAIR WOOL  asked, "And  that would  only be  if you  had more                                                               
demand                                                                                                                          
                                                                                                                                
MR. HICKOK answered correct.                                                                                                    
                                                                                                                                
CO-CHAIR WOOL asked if the cargo  coming in now is mostly staying                                                               
on  the Kenai  Peninsula.   He  posited that  cargo destined  for                                                               
Anchorage  or  north  of  Anchorage  would  generally  ship  into                                                               
Anchorage.                                                                                                                      
                                                                                                                                
MR.  HICKOK  said  that  aligns  with  his  best  guess.    After                                                               
ascertaining  that no  other committee  members wished  to ask  a                                                               
question, he thanked the committee  for allowing he and Mr. Regis                                                               
to testify.                                                                                                                     
                                                                                                                                
2:07:26 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 2:07 p.m. to 2:09 p.m.                                                                       
                                                                                                                                
2:08:54 PM                                                                                                                    
                                                                                                                                
JIM JAGER,  Director of  External Affairs,  Port of  Alaska, said                                                               
the Port  of Alaska is a  facility that is owned  and operated by                                                               
the  Municipality of  Anchorage.    He said  the  Port of  Alaska                                                               
serves the  Anchorage community,  all of  Alaska, and  the entire                                                               
nation.  He said the Port  of Anchorage opened in 1961 to support                                                               
regional  economic  development  and  added  that  the  Anchorage                                                               
Assembly renamed it to the Port  of Alaska in 2017 to reflect its                                                               
regional, state, and national significance.                                                                                     
                                                                                                                                
MR. JAGER addressed slide 2  of his PowerPoint presentation [hard                                                               
copy included in the committee  packet].  He remarked that Alaska                                                               
is  a  "virtual  island"  with   an  economy  reliant  on  marine                                                               
transport.   He  said 90  percent  of Alaska's  inbound cargo  is                                                               
marine freight, meaning  it is delivered on a ship  or barge.  He                                                               
added  that  air and  truck  carriers  account  for less  than  5                                                               
percent  of Alaska's  inbound  cargo  freight.   He  said all  of                                                               
Alaska's major industries rely on  marine commerce.  He commented                                                               
that  there is  no  SOA department  or  official responsible  for                                                               
oversight, advocacy,  planning, or  funding of ports  and related                                                               
marine  infrastructure.     He  noted  that   the  Department  of                                                               
Transportation  & Public  Facilities (DOTPF)  is responsible  for                                                               
highways,  aviation facilities,  AMHS,  and marine  harbors.   He                                                               
drew a distinction between harbors and  ports.  He noted that the                                                               
Alaska  Railroad is  a  state-owned  corporation responsible  for                                                               
rail  transport.   He said  the Department  of Natural  Resources                                                               
employs  a   state  pipeline  coordinator  responsible   for  all                                                               
pipeline systems.   He repeated that there is no  state entity or                                                               
employee responsible for Alaska's cargo  ports.  He remarked that                                                               
Alaska's  ports are  owned and  operated  by a  variety of  local                                                               
government, quasi-government, and private  interests, so there is                                                               
very little coordination between ports on a statewide level.                                                                    
                                                                                                                                
2:12:27 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  asked if most  states have some sort  of statewide                                                               
port authority.   He  referenced the Port  Authority of  New York                                                               
[and New Jersey] (PANYNJ).                                                                                                      
                                                                                                                                
MR. JAGER said it  varies from state to state.   He said there is                                                               
no single model that stands out as "the norm."                                                                                  
                                                                                                                                
REPRESENTATIVE DRUMMOND  commented that she  grew up in  New York                                                               
City (NYC).   She noted that PANYNJ is a  cooperation between two                                                               
states.   She said she  has always  found that fascinating.   She                                                               
commented that  she thinks it  would be smart for  the Matanuska-                                                               
Susitna Borough  to cooperate with the  Municipality of Anchorage                                                               
on a joint  port authority.  She remarked that  if two states can                                                               
do it, two boroughs should be able to as well.                                                                                  
                                                                                                                                
2:13:26 PM                                                                                                                    
                                                                                                                                
MR. JAGER addressed slide  3.  He said the Port  of Alaska is the                                                               
state's primary  inbound cargo  handling facility.   He  said the                                                               
port  handles  approximately  half  of  Alaska's  inbound  marine                                                               
freight, amounting  to about 9  million tons of fuel  and freight                                                               
in 2018.   He said half of  the freight that arrives  at the port                                                               
continues  to a  destination elsewhere  in the  state beyond  the                                                               
municipality's borders.  He said  that includes freight that ends                                                               
up  in Southeast  Alaska.   He called  the port's  cargo business                                                               
"very  stable."   He said  it is  closely linked  to the  state's                                                               
population,  meaning   it  tends  to  increase   as  the  state's                                                               
population grows and decrease as the state's population shrinks.                                                                
                                                                                                                                
2:14:15 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  WOOL  sought clarity  on  the  amount of  freight  that                                                               
enters  the Port  of  Alaska that  ends up  at  a destination  in                                                               
Southeast Alaska.                                                                                                               
                                                                                                                                
MR. JAGER said  it is some freight,  not a lot.   He explained it                                                               
is a  matter of cargo logistics,  meaning "it is cheaper  to send                                                               
it back on backhaul  than it is to send a  vessel up, deliver it,                                                               
and  ship  it  back  empty."    He  offered  avgas,  or  aviation                                                               
gasoline,  as an  example.   He explained  that most  of Alaska's                                                               
avgas enters the Port of Alaska  and that avgas due for Southeast                                                               
Alaska is placed on a barge returning to the region.                                                                            
                                                                                                                                
2:15:00 PM                                                                                                                    
                                                                                                                                
MR.  JAGER addressed  slide 4.   He  called Port  of Alaska  "the                                                               
state's most versatile port."  He  said it handles a wide variety                                                               
of domestic  and foreign cargo  carriers.   He noted that  it has                                                               
three general  cargo terminals  with lift-on,  lift-off, roll-on,                                                               
roll-off, and break-bulk capabilities.   He said the port has two                                                               
petroleum terminals,  handles dry  bulk cement,  has a  dry barge                                                               
landing, and welcomes  cruise ships.  He noted that  the port had                                                               
11 cruise  ship landings  in 2018,  expects to  have the  same in                                                               
2019, and will host MS  Queen Elizabeth.  Interestingly, he said,                                                               
Port of Alaska  is not the biggest port in  the state by tonnage,                                                               
noting that  the ports in Valdez,  Nikiski, and Red Dog  Mine are                                                               
major export facilities.   He said Port of Alaska  is the biggest                                                               
inbound cargo facility in the state.                                                                                            
                                                                                                                                
MR. JAGER  addressed slide 5.   He said cargo  handling logistics                                                               
and   efficiencies   are   driven  by   proximity   to   markets,                                                               
infrastructure, and  transportation connections.  He  stated that                                                               
Port  of Alaska  is  [indisc.]  and its  docks  are leveraged  by                                                               
hundreds  of  millions  of dollars  of  private,  freight-related                                                               
infrastructure.  He  said the port has a  125-acre cargo handling                                                               
yard, 60,000 tons  of cement storage, and 3.4  million barrels of                                                               
fuel storage.                                                                                                                   
                                                                                                                                
MR. JAGER addressed slide  6.  He said the Port  of Alaska is the                                                               
state's intermodal  connection point for cargo  distribution.  He                                                               
noted that  the port is near  the AML and Northstar  Marine barge                                                               
terminals that  service Western  Alaska.  He  said 60  percent of                                                               
the state's  population is  within a 2-hour  drive via  the state                                                               
highway system.   He added that  75 percent of all  Alaskans live                                                               
on  the  Anchorage-connected road  system.    He said  there  are                                                               
multiple rail connections and 2 miles  of rail track on the port.                                                               
He  said  the  railroad's  main   cargo  yard  is  at  grade  and                                                               
immediately adjacent to  the port.  He noted that  the runways at                                                               
Ted  Stevens  Anchorage  International  Airport  and  Joint  Base                                                               
Elmendorf-Richardson (JBER)  are both within sight  of the port's                                                               
docks.   He also discussed  the valve yard and  related pipelines                                                               
that connect  the port  to the  international airport,  JBER, the                                                               
petroleum refinery in Nikiski, and  various distributors that can                                                               
serve the entire  state.  He said this  infrastructure gives Port                                                               
of Alaska more  inbound cargo handling capacity  than every other                                                               
port in Southcentral Alaska combined.                                                                                           
                                                                                                                                
2:18:04 PM                                                                                                                    
                                                                                                                                
MR. JAGER addressed  slide 7.  He said the  Port of Alaska serves                                                               
three  core  functions.    The   first,  he  said,  is  commerce,                                                               
including statewide cargo services  and economic development.  He                                                               
noted  that commerce  generates  nearly all  the port's  revenue,                                                               
which pays for  all the port's operations.  He  said the port has                                                               
been cashflow positive  since the 1964 Anchorage  earthquake.  He                                                               
added  that no  tax dollars  or other  public money  supports the                                                               
port's operations.   He said the  second function of the  port is                                                               
national  defense, noting  that  it has  been  designated by  the                                                               
Department of  Defense (DOD) as  a commercial  strategic seaport.                                                               
He  said the  third function  is earthquake  resiliency, disaster                                                               
response,  and disaster  recovery.   He stated  that the  Port of                                                               
Alaska is key to every  state and federal disaster response plan.                                                               
He noted  that every time  an emergency drill is  undertaken, the                                                               
drill fails if the Port of Alaska fails.                                                                                        
                                                                                                                                
2:19:03 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  WOOL asked  what would  happen  if the  Port of  Alaska                                                               
sustained  earthquake   damage.    He   asked  if  the   port  is                                                               
particularly vulnerable.                                                                                                        
                                                                                                                                
MR. JAGER  confirmed that the port  is in a vulnerable  area.  He                                                               
said the port survived the  recent earthquake in November with no                                                               
operational failure.   He  relayed that there  was one  tanker in                                                               
dock when  the earthquake hit.   He described the  inspection and                                                               
evaluation process  used to confirm  everything was okay.   "That                                                               
said," he continued,  "we dodged a bullet.  It  could have been a                                                               
lot worse."   He said  a lot of work  is put toward  ensuring the                                                               
resilience of the port but noted that it is an aging facility.                                                                  
                                                                                                                                
CO-CHAIR  WOOL asked  Mr. Jager  to explain  a photo  featured on                                                               
slide 7.                                                                                                                        
                                                                                                                                
MR. JAGER pointed  out the wharf and its piles  on the right side                                                               
of the  photo.   He said  ice will build  up on  the piling.   He                                                               
shared that the ice-covered piles  are referred to as "corndogs."                                                               
He said  the photo is probably  from January, as the  ice buildup                                                               
shown is typical for that month.                                                                                                
                                                                                                                                
2:20:47 PM                                                                                                                    
                                                                                                                                
MR.  JAGER  addressed slide  8.    He said  the  port  is in  the                                                               
business of bringing in freight  and fuel for Alaska's residents,                                                               
businesses, and economy.   He stated that 85  percent of Alaskans                                                               
receive a  direct benefit from the  Port of Alaska.   He said the                                                               
entire  state receives  indirect  benefits, such  as the  massive                                                               
amounts  of  liquid  fuel  that  crosses the  port's  dock.    He                                                               
restated that  virtually all  the avgas used  in the  state comes                                                               
across  the port's  dock.    He spoke  about  the port's  cement-                                                               
handling facility  and said about  90 percent of the  cement used                                                               
in the state crosses its dock.   He said the three biggest cement                                                               
users in Alaska in 2018  were Liberty Energy Project, Eielson Air                                                               
Force Base,  and the Pogo  gold mine, and  that they all  use the                                                               
facilities at the Port of Alaska to conduct their business.                                                                     
                                                                                                                                
2:22:23 PM                                                                                                                    
                                                                                                                                
MR.  JAGER  addressed  slide  9.     He  restated  that  DOD  has                                                               
designated the Port  of Alaska as a  commercial strategic seaport                                                               
that  supports  its  missions  in Alaska,  the  Arctic,  and  the                                                               
Pacific Rim.   He said  about 20 percent  of the port's  cargo is                                                               
military-related.    He noted  that  its  status as  a  strategic                                                               
seaport means the Port of  Alaska must have facilities to support                                                               
short-notice deployment.   He described the things  the port must                                                               
make available to the military should it decide to deploy.                                                                      
                                                                                                                                
MR. JAGER addressed  slide 10.  He  said the port is  a key piece                                                               
of state and  federal disaster infrastructure.   He repeated that                                                               
every disaster response plan relies  on the port functioning.  He                                                               
said the need  for earthquake resiliency would  increase the cost                                                               
of  replacing the  dock.   He stated  that earthquake  resiliency                                                               
matters because  Alaska is a  just-in-time (JIT)  delivery state.                                                               
He clarified that there is 6 to  10 days' worth of food supply in                                                               
the  state at  any given  time, meaning  that Alaskans  "will get                                                               
hungry very quickly" if the supply chain is broken.                                                                             
                                                                                                                                
MR. JAGER  dismissed an  assertion that air  shipment would  be a                                                               
suitable alternative  in the  event of  the port  closing, noting                                                               
that  Ted Stevens  Anchorage International  Airport is  the fifth                                                               
busiest cargo airport on the  planet with approximately 500 wide-                                                               
body flights landing  each week.  In order to  replace the port's                                                               
sealift capabilities, he said, the  airport would have to receive                                                               
an additional 700 flights per week.                                                                                             
                                                                                                                                
MR. JAGER said upper Cook Inlet  is tsunami-proof and is the only                                                               
Southcentral Alaska  port that survived  "the earthquake  and the                                                               
tsunamis."   As a result, he  explained, it played a  key role in                                                               
reconstruction.   He said  the earthquake is  the reason  why the                                                               
state's main port moved from Seward to Anchorage.                                                                               
                                                                                                                                
2:25:18 PM                                                                                                                    
                                                                                                                                
MR. JAGER addressed  slide 11.  He stated  that Anchorage's docks                                                               
are 50  years old  and are "suffering  a slow-motion  disaster of                                                               
corrosion  and obsolescence."    He said  the  facility has  long                                                               
exceeded its 35-year  design life.  He said the  aging piles have                                                               
lost up  to three-quarters of  their original thickness  near the                                                               
mudline  and   are  unlikely   to  survive   another  significant                                                               
earthquake.   He described repairs  that began in 2004  to jacket                                                               
the piles  in steel to  reinforce the  corrosion.  He  noted that                                                               
those  repairs are  one-time  repairs  that only  last  10 to  15                                                               
years.  He said the port is  about nine years away from having to                                                               
close docks due to lack of  load-bearing capacity.  He added that                                                               
this assumes there is no earthquake in the meantime.                                                                            
                                                                                                                                
2:26:19 PM                                                                                                                    
                                                                                                                                
MR. JAGER  addressed slide 12  and introduced the Port  of Alaska                                                               
Modernization  Program (PAMP),  which he  explained will  replace                                                               
the  port's ageing  docks and  related infrastructure  to improve                                                               
safety  and operational  efficiency.   He  said  PAMP would  also                                                               
allow the port  to accommodate modern shipping  operations and to                                                               
improve  resiliency.    He  noted  that  the  port's  docks  were                                                               
originally  built  in  the  1960s   when  shipping  vessels  were                                                               
smaller.   He  said the  port's low  mean depth  is currently  35                                                               
feet.   He stated that the  project would allow for  depths up to                                                               
45 feet in  order to accommodate larger ships.   He noted as well                                                               
that the  original docks  were built  before the  introduction of                                                               
seismic standards for  marine facilities.  He said  the new docks                                                               
will be  designed to  survive a major  earthquake.   He clarified                                                               
that PAMP  is not an  expansion plan;  it is a  replacement plan.                                                               
He commented  that the port  already has  plenty of docks  and is                                                               
functioning at  35 to 40 percent  of its dock capacity.   He said                                                               
best practices  experts would say  that a port should  not expand                                                               
its  docks  until it  reaches  70  percent  capacity.   This,  he                                                               
explained,  means the  state's population  could double  before a                                                               
dock  expansion becomes  necessary.   He  restated the  challenge                                                               
facing the port because the dock is in its final decade of life.                                                                
                                                                                                                                
MR.  JAGER   addressed  slide  13.     He  stated   that  initial                                                               
construction on the  modernization project is underway.   He said                                                               
shoreline stabilization began  in 2018 for the location  of a new                                                               
petroleum  and  cement  terminal.   He  identified  the  area  of                                                               
construction  in  a  photograph  displayed   on  slide  13.    He                                                               
described  the  "deep  soil  mixing"  process  to  boost  seismic                                                               
resiliency.   He noted  that the earthquake  in November  did not                                                               
significantly damage  the area.   He said the  modernization plan                                                               
includes  the building  of a  new dock  and a  new petroleum  and                                                               
cement  terminal.   He described  the process  through which  the                                                               
port will remain functioning during the build period.                                                                           
                                                                                                                                
2:29:16 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  WOOL  asked  about the  location  of  the  construction                                                               
relative to existing docks.                                                                                                     
                                                                                                                                
MR. JAGER said the existing  docks are well beyond their lifespan                                                               
so repairing them  is not an option.  He  explained that the plan                                                               
is  to  replace  the  current   facility  with  new  construction                                                               
approximately 400 yards  south and 150 feet farther  out into the                                                               
ocean.   He  said that,  after building  the southmost  dock, the                                                               
construction  will  move  north  and  demolish  the  southernmost                                                               
existing dock.   He said  the construction process  would proceed                                                               
north over the  next eight years with a  "demo-build" model until                                                               
the whole facility  has been replaced.  He stated  that this will                                                               
keep  the same  number  of terminals  operational throughout  the                                                               
process.                                                                                                                        
                                                                                                                                
2:30:29 PM                                                                                                                    
                                                                                                                                
MR. JAGER  asked committee members  not to confuse PAMP  with the                                                               
failed Port  of Anchorage Intermodal  Expansion Project  from the                                                               
early  2000s.     He  described  the  expansion   project  as  "a                                                               
completely different type  of project" that was  meant to replace                                                               
the docks  and expand  the port  far beyond  market requirements.                                                               
He said  the project created  about $250 million worth  of repair                                                               
work that  the port now  must undertake.   He explained  that the                                                               
port  is  currently in  litigation  to  receive damages  for  the                                                               
repair  work.   He clarified  that PAMP  is simply  a replacement                                                               
project that,  based on the  requests of port users,  could range                                                               
up to  $2 billion, though he  shared that he expects  costs to be                                                               
"quite  a bit  less than  that."   He  said the  port is  working                                                               
toward a "beneficiary  pays model," so that  the beneficiaries of                                                               
the various improvements are the ones who will pay for them.                                                                    
                                                                                                                                
CO-CHAIR WOOL asked  for an explanation of the model  and who the                                                               
beneficiaries are.                                                                                                              
                                                                                                                                
MR.  JAGER said,  as  an example,  the bulk  of  the expense  for                                                               
replacing the petroleum  and cement terminal should  be paid back                                                               
through tariffs  and fees associated  with the terminal,  so that                                                               
petroleum and  cement users would  be the ones  ultimately paying                                                               
for it.  He  said that would mean a portion  of every purchase of                                                               
a gallon of  gasoline would go toward paying the  cost of the new                                                               
dock.   He  said the  tariffs and  fees would  repay the  revenue                                                               
bonds that fund the project.                                                                                                    
                                                                                                                                
2:32:46 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  said that  means the tariffs  would be  charged to                                                               
the commercial customers that are using the dock.                                                                               
                                                                                                                                
MR. JAGER  said that is  correct, and  that the users  would pass                                                               
along the  cost to  Alaskans, who he  described as  "the ultimate                                                               
customers."   He clarified that  the Port of Alaska  is different                                                               
from most Lower  48 ports.  He  drew a contrast with  the Port of                                                               
Tacoma, which handles  both inbound and outbound cargo.   He said                                                               
half  of  the Port  of  Tacoma's  tariffs  are being  charged  to                                                               
outbound cargo and thus the ultimate  payer is someone not in the                                                               
State  of Washington.   He  explained  that much  of the  inbound                                                               
cargo that  arrives at the Port  of Tacoma is loaded  onto trucks                                                               
and driven  east to out-of-state destinations,  thus the ultimate                                                               
payer  of those  tariffs is  also  someone outside  the State  of                                                               
Washington.  He  said virtually all the Port  of Alaska's freight                                                               
is inbound  and remains in  the state,  so Alaskans are  the ones                                                               
who pay the  bill.  He explained that the  question then becomes,                                                               
"What's the  most efficient way  for them to  pay the bill?"   He                                                               
said a cargo  tariff is one option but noted  that it would "tilt                                                               
the  cargo  playing  field"  in  a  way  that  does  not  benefit                                                               
Alaskans.  He  explained that if the tariff is  raised on inbound                                                               
cargo  a certain  amount per  ton, grocery  stores would  pay the                                                               
extra cost  to bring  in time-sensitive  items, such  as produce,                                                               
via ships  arriving at the Port  of Alaska.  But,  he said, other                                                               
importers like car dealers might  decide that barging vehicles is                                                               
more  economical  than  shipping,  thus  bypassing  the  Port  of                                                               
Alaska.  This, he explained,  would result in less tonnage coming                                                               
across port docks and a  need for further tariff increases, which                                                               
could  result   in  major  price   spikes  in   commodities  like                                                               
groceries.   He  said that  could create  economic peril  for the                                                               
state.  He advocated for a  different approach in which state tax                                                               
dollars help pay  for the new facility.  He  said this would help                                                               
distribute   the  costs   without  causing   unwanted  downstream                                                               
effects.                                                                                                                        
                                                                                                                                
2:36:19 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  said he is not  sure to which "state  tax dollars"                                                               
Mr. Jager is referring.                                                                                                         
                                                                                                                                
MR. JAGER clarified that he means  SOA money that could come from                                                               
any state tax source.                                                                                                           
                                                                                                                                
CO-CHAIR  WOOL  revisited  the  topic of  cars  being  barged  to                                                               
Alaska.   He posited that this  would mean the cars  not crossing                                                               
Port of Alaska docks.                                                                                                           
                                                                                                                                
MR. JAGER said most barges  that arrive in Southcentral Alaska go                                                               
to the Port of Whittier.                                                                                                        
                                                                                                                                
CO-CHAIR  WOOL asked  for confirmation  that the  Port of  Alaska                                                               
does  not handle  much barge  traffic, rather  it handles  mostly                                                               
ship traffic.                                                                                                                   
                                                                                                                                
MR. JAGER  said that is  correct and  confirmed that the  Port of                                                               
Alaska  receives virtually  no containerized  barge traffic.   He                                                               
clarified that  most of the barges  that the port deals  with are                                                               
fuel barges from Valdez.                                                                                                        
                                                                                                                                
2:37:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RASMUSSEN asked  if Mr.  Jager is  asking SOA  to                                                               
support the Port of Alaska.                                                                                                     
                                                                                                                                
MR. JAGER answered  that the Municipality of  Anchorage is asking                                                               
for support on the new dock.   He said the legislature previously                                                               
appropriated  $20  million  for  the  new  petroleum  and  cement                                                               
terminal.    He  said  the  port  is  moving  forward  with  that                                                               
construction,  but full  funding has  not yet  been secured.   He                                                               
said the amount  of SOA funding received will  determine the size                                                               
of the tariffs to be levied on petroleum and cement.                                                                            
                                                                                                                                
REPRESENTATIVE RASMUSSEN asked whether,  in Mr. Jager's scenario,                                                               
SOA would retain  some ownership stake in the port.   She said it                                                               
does not make  sense for SOA to fund infrastructure  that it does                                                               
not own.                                                                                                                        
                                                                                                                                
MR. JAGER said  he would be happy to have  that conversation.  He                                                               
revisited  the topic  of the  beneficiaries pay  model and  noted                                                               
that the port has a disaster  response function.  He said it will                                                               
cost 15  percent more than  the overall  dock cost to  ensure the                                                               
petroleum and cement  facility is up to  standards for earthquake                                                               
resiliency.  He  stated that the extra cost does  not deliver any                                                               
benefits  to  the cement  companies  or  the petroleum  companies                                                               
because  a regular  commerce-level  dock  would adequately  serve                                                               
their needs.  He asked, "So who  pays that extra 15 percent?"  He                                                               
suggested that, if earthquake resiliency  is a public benefit, it                                                               
should  probably  be paid  with  public  money, either  state  or                                                               
federal.                                                                                                                        
                                                                                                                                
2:40:09 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  WOOL  asked how  much  SOA  money  Port of  Alaska  has                                                               
received so far.                                                                                                                
                                                                                                                                
MR. JAGER answered, "$20 million last year for this dock."                                                                      
                                                                                                                                
CO-CHAIR WOOL asked about an  earlier reference to a $250 million                                                               
repair.                                                                                                                         
                                                                                                                                
MR. JAGER clarified that the $250  million was for repair work to                                                               
the failed Port of Anchorage Intermodal Expansion Project.                                                                      
                                                                                                                                
CO-CHAIR WOOL asked who funded that project.                                                                                    
                                                                                                                                
MR. JAGER said  it was a combination of state  and federal funds,                                                               
but mostly  federal funds.   He commented that the  United States                                                               
Maritime Administration (MARAD) was  the project manager for that                                                               
project.  He said the courts  are deciding why the project failed                                                               
and the  port is  currently in litigation  with MARAD  to recover                                                               
the damages,  which he  clarified means the  amount of  money the                                                               
port needs to  repair the damage MARAD caused.   He said the $250                                                               
million is  part of PAMP only  because the work needs  to be done                                                               
to make room for the construction  project.  He remarked that the                                                               
work will not generate any new  revenue, so the only way for that                                                               
part  of  the   project  to  be  funded  is   through  the  MARAD                                                               
litigation.   He noted that this  is unrelated to the  port's ask                                                               
for SOA  funds, and that  it is  separate from the  petroleum and                                                               
cement terminal.                                                                                                                
                                                                                                                                
2:42:17 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  WOOL asked  how  much  funding the  Port  of Alaska  is                                                               
requesting from SOA.                                                                                                            
                                                                                                                                
MR. JAGER noted that the  legislature appropriated $20 million in                                                               
2018 and  he was  informed that  it would likely  do the  same in                                                               
2019.   He  said  $20 million  is  the port's  minimal  ask.   He                                                               
referenced  the potential  economic impact  of a  tariff increase                                                               
and  suggested that  additional state  support would  benefit the                                                               
economy  as  cement   and  fuel  handling  would   be  made  less                                                               
expensive.                                                                                                                      
                                                                                                                                
2:43:06 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RASMUSSEN asked  about a  timeline for  the MARAD                                                               
litigation.                                                                                                                     
                                                                                                                                
MR. JAGER said he anticipates a trial date in late 2019.                                                                        
                                                                                                                                
2:43:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE CLAMAN  asked if  cement storage and  fuel storage                                                               
are primarily  being funded with  contributions from  entities in                                                               
those industries.                                                                                                               
                                                                                                                                
MR. JAGER  said all  the storage  facilities are  privately owned                                                               
and  operated.   He  explained  that  the  Port  of Alaska  is  a                                                               
landlord port that  will lease land to fuel  and cement companies                                                               
who build  and maintain their own  facilities.  He said  they are                                                               
just leveraging the value of the dock.                                                                                          
                                                                                                                                
REPRESENTATIVE  CLAMAN observed  that one  of the  photos in  the                                                               
slideshow  [on slide  13] features  numerous storage  tanks.   He                                                               
asked for  confirmation that the  oval-shaped tank is  for cement                                                               
storage and the cylinder tanks are for fuel storage.                                                                            
                                                                                                                                
MR. JAGER said the port has  3.4 million barrels of fuel storage,                                                               
ranging  from jet  fuel to  gasoline to  methanol.   He said  all                                                               
those facilities are  owned by private companies.   He added that                                                               
the  dome pictured  on slide  13 contains  40,000 tons  of cement                                                               
storage and is  owned by Alaska Basic Industries (ABI).   He said                                                               
ABI  has an  additional "20,000  tons  of silo  and rail  loading                                                               
racks, and  truck loading racks."   He  said the total  amount is                                                               
60,000 tons.                                                                                                                    
                                                                                                                                
REPRESENTATIVE CLAMAN  asked for confirmation that  the silos are                                                               
not pictured in the photo on slide 13.                                                                                          
                                                                                                                                
MR. JAGER said that is correct.   He noted that they are adjacent                                                               
to the dome but are not pictured.                                                                                               
                                                                                                                                
2:45:44 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL  said, the  way he understands  it, the  $2 billion                                                               
cost  of PAMP  would be  paid for  by raised  tariffs on  certain                                                               
products  that come  across the  port's docks,  which would  then                                                               
increase the price to end users.                                                                                                
                                                                                                                                
MR. JAGER said  that is not quite accurate.   He described the $2                                                               
billion figure as "an all-in number  if we build everything."  He                                                               
described the process  through which the port  sourced ideas from                                                               
users  and interest  groups.   He said  the port  came up  with a                                                               
conceptual design  that included  all the requests,  though noted                                                               
that  "a  lot of  times  you  want  more  than you  can  actually                                                               
afford."   He said the  $2 billion figure  is for seven  or eight                                                               
different  projects,  including  the  new  petroleum  and  cement                                                               
terminal,  two  new  container   terminals,  an  additional  fuel                                                               
terminal,  superseismic resiliency  requirements, various  repair                                                               
projects, private  user upgrades,  and various upgrades  to abide                                                               
by the  needs of DOD.   He noted  that the private  user upgrades                                                               
would be paid  for by the users themselves, like  a crane upgrade                                                               
for Matson, Inc.   He said the funding sources  will be different                                                               
for  each project.   He  stated that  the repairs  to the  failed                                                               
intermodal  expansion project  should come  from litigation.   He                                                               
said the basic  commerce-level docks would be paid  either by SOA                                                               
money or port tariff increases.                                                                                                 
                                                                                                                                
2:48:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DRUMMOND asked  why DOD could not pay  for part of                                                               
the renewal costs.  She asked  as well whether DOD pays port fees                                                               
when it uses the port for deployment.                                                                                           
                                                                                                                                
MR.  JAGER  stated that  the  DOD  pays  normal tariffs  for  the                                                               
material  they move  across the  dock for  day-to-day operations.                                                               
He  said  DOD  does  not   pay  to  maintain  the  infrastructure                                                               
necessary to make  2,200 feet of dock available to  it.  He noted                                                               
that this  is an  issue with strategic  ports across  the nation,                                                               
and  that almost  every strategic  port has  complained that  DOD                                                               
imposes  requirements yet  does not  assist in  paying for  those                                                               
requirements.   He  described  the process  through  which a  DOD                                                               
deployment would  be handled  by a typical  port and  that port's                                                               
regular users.   He  noted that  the Port of  Alaska is  not like                                                               
other  ports, so  maintaining that  extra  dock space  is a  pure                                                               
extra expense.  He said the  problem is that DOD cannot designate                                                               
funds to the  Port of Alaska without earmarks.   He said the port                                                               
has been working on changing that.                                                                                              
                                                                                                                                
2:50:38 PM                                                                                                                    
                                                                                                                                
CO-CHAIR WOOL thanked Mr. Jager for his presentation.                                                                           
                                                                                                                                
^PRESENTATION: Importance of AMHS to the Port of Bellingham                                                                     
   PRESENTATION: Importance of AMHS to the Port of Bellingham                                                               
                                                                                                                              
2:51:00 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  WOOL   announced  the   final  order  of   business,  a                                                               
presentation by Rob Fix on the  importance of AMHS to the Port of                                                               
Bellingham.                                                                                                                     
                                                                                                                                
2:51:09 PM                                                                                                                    
                                                                                                                                
ROB  FIX, Executive  Director, Port  of  Bellingham, thanked  the                                                               
committee  for allowing  him to  speak.   He distributed  several                                                               
handouts.  He  said the Port of Bellingham has  enjoyed a 30-year                                                               
partnership with AMHS.  He  noted that AMHS previously voyaged to                                                               
the Port  of Seattle, but  now Bellingham is  Alaska's connection                                                               
to the Lower  48.  He stated that Bellingham  built a $10 million                                                               
ferry  terminal   when  AMHS  business  moved   from  Seattle  to                                                               
Bellingham.   He  remarked  that  the Port  of  Bellingham is  an                                                               
important connection to  the Lower 48 for  military families, the                                                               
fishing  industry,  business inventory,  construction  equipment,                                                               
and recreational  travelers.  He  noted that someone with  a dog,                                                               
gun, or driving  under the influence (DUI)  conviction would find                                                               
it very  difficult to drive through  Canada to reach Alaska.   He                                                               
noted that  security checks  and a passport  are not  required to                                                               
sail out of Bellingham.                                                                                                         
                                                                                                                                
CO-CHAIR  WOOL established  a scenario  in which  a person  rides                                                               
AMHS from Bellingham to avoid driving  in Canada.  He asked where                                                               
that  person would  disembark to  avoid having  to drive  through                                                               
Canada again.                                                                                                                   
                                                                                                                                
MR.  FIX  said  a  person can  disembark  in  Juneau,  Ketchikan,                                                               
Skagway, or Haines without having to  show a passport.  He said a                                                               
person could have a gun in those places too.                                                                                    
                                                                                                                                
CO-CHAIR  WOOL noted  that  if  he was  heading  to Anchorage  or                                                               
Fairbanks he would still have to drive through Canada.                                                                          
                                                                                                                                
REPRESENTATIVE DRUMMOND said there is a cross-gulf connection.                                                                  
                                                                                                                                
MR.  FIX  noted  that  he   is  not  wholly  familiar  with  AMHS                                                               
operations that far north.                                                                                                      
                                                                                                                                
CO-CHAIR WOOL recalled fondly his  experience riding the ferry to                                                               
Haines.                                                                                                                         
                                                                                                                                
2:53:27 PM                                                                                                                    
                                                                                                                                
MR. FIX said he believes  the economic benefits of the Bellingham                                                               
Connection are very large.  He  noted that the summer run of AMHS                                                               
runs full of recreational travelers  who benefit Alaska's tourism                                                               
economy.   He  added  that ferry  passengers  commonly travel  to                                                               
Anchorage  and  Fairbanks too.    He  recalled hearing  that  the                                                               
second-largest  group  of  AMHS  ticket buyers  is  residents  of                                                               
Anchorage.  He said the  Port of Bellingham produces the greatest                                                               
fare box revenue  in AMHS.  He spoke to  the strong economic ties                                                               
between   the  State   of  Washington   and   SOA,  noting   that                                                               
approximately 113,000 jobs in the  Puget Sound region are tied to                                                               
the commerce between  the two states.  He noted  that the Port of                                                               
Bellingham is an American port with American employees.                                                                         
                                                                                                                                
2:54:25 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  WOOL  asked  how  much   annual  funding  the  Port  of                                                               
Bellingham gets from the State of Washington.                                                                                   
                                                                                                                                
MR. FIX said it receives zero  state dollars for AMHS.  He added,                                                               
"We do have an airport that  will occasionally have a project the                                                               
state  requires."   He  noted  that  the airport  often  receives                                                               
federal   funds  to   fulfill  Federal   Aviation  Administration                                                               
mandates.     He  said   the  port   receives  state   money  for                                                               
environmental cleanups.                                                                                                         
                                                                                                                                
CO-CHAIR   WOOL   asked   whether   ports   in   Washington   are                                                               
owned/operated by the state or by the municipalities.                                                                           
                                                                                                                                
MR.  FIX said,    hey  are all  individual  municipalities.    He                                                               
explained  that  the Port  of  Bellingham  is governed  by  three                                                               
independent elected officials.  He  clarified that it is not part                                                               
of the city, part  of the county, or part of the  state.  He said                                                               
each  Washington  port  is  unique and  has  its  own  governance                                                               
structure.  He  contrasted this with a different  system found in                                                               
other states in  which the ports are  state-operated and governed                                                               
by appointees.                                                                                                                  
                                                                                                                                
CO-CHAIR WOOL posited that each  port has its own port authority,                                                               
or something to that effect.                                                                                                    
                                                                                                                                
MR.  FIX said  that is  correct.   He  said he  reports to  three                                                               
commissioners  who  are  elected  by  the  community  of  Whatcom                                                               
County.                                                                                                                         
                                                                                                                                
2:55:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  RASMUSSEN asked  if  the port  receives State  of                                                               
Washington funds.                                                                                                               
                                                                                                                                
MR.  FIX   answered  yes,  for  the   environmental  cleanups  he                                                               
mentioned.                                                                                                                      
                                                                                                                                
REPRESENTATIVE RASMUSSEN  asked if the State  of Washington would                                                               
consider a partnership with AMHS.                                                                                               
                                                                                                                                
MR. FIX  said he  is willing to  discuss it but  noted he  is not                                                               
able to make decisions on behalf  of the State of Washington.  He                                                               
noted that the port employs  lobbyists and works closely with the                                                               
State of  Washington.   He said  he would be  happy to  work with                                                               
Representative Rasmussen on that issue.                                                                                         
                                                                                                                                
2:56:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE STORY  asked for confirmation of  something on the                                                               
handout, that  20,000 passengers  travel to/from  Bellingham each                                                               
year, generating $14.2 million in net profit for AMHS.                                                                          
                                                                                                                                
MR. FIX clarified that 20,000 is  an average figure [from 2014 to                                                               
2018].  He  noted that some years have seen  ridership as high as                                                               
30,000 people.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  STORY  read another  figure  that,  in 2015,  the                                                               
Bellingham  route generated  $21.5  million in  revenue for  AMHS                                                               
with $7.3  million in expenses.   She asked how much  the Port of                                                               
Bellingham spends in marketing efforts for tourism to Alaska.                                                                   
                                                                                                                                
MR.  FIX answered,  "Not as  much as  we should."   He  expressed                                                               
interest  in  collaborating to  get  the  most out  of  marketing                                                               
dollars.  He said current marketing is minimal.                                                                                 
                                                                                                                                
2:58:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   CLAMAN   sought   clarity   on   the   financial                                                               
relationship between AMHS and the Port of Bellingham.                                                                           
                                                                                                                                
MR. FIX  stated that  the port  is owned by  Whatcom County.   He                                                               
confirmed that SOA  has leased the port's ferry  terminal for the                                                               
past 30 years.                                                                                                                  
                                                                                                                                
REPRESENTATIVE CLAMAN  asked where the AMHS  terminal was located                                                               
before the Port of Bellingham.                                                                                                  
                                                                                                                                
MR. FIX answered Seattle.                                                                                                       
                                                                                                                                
REPRESENTATIVE CLAMAN posited that  SOA is already in partnership                                                               
with the  port and the summer  season is when "the  cash register                                                               
is running quite rapidly."                                                                                                      
                                                                                                                                
MR. FIX said that is correct.                                                                                                   
                                                                                                                                
REPRESENTATIVE CLAMAN asked  how many vessels make  the trip down                                                               
to the Port of Bellingham.                                                                                                      
                                                                                                                                
MR. FIX  said there is a  year-round Friday sailing and  a second                                                               
sailing during the summer season that departs on Saturdays.                                                                     
                                                                                                                                
REPRESENTATIVE CLAMAN asked whether  a third sailing would likely                                                               
have high ridership.                                                                                                            
                                                                                                                                
MR. FIX answered, "In the summer months, for sure."                                                                             
                                                                                                                                
2:59:21 PM                                                                                                                    
                                                                                                                                
CHAIR  WOOL  recalled riding  the  ferry  from Seattle  to  bring                                                               
equipment to Fairbanks for the purpose of starting a business.                                                                  
                                                                                                                                
MR. FIX noted  that this is a common story  and that people often                                                               
bring equipment up to Alaska via AMHS.                                                                                          
                                                                                                                                
2:59:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE STORY  asked if  Mr. Fix is  aware of  exactly how                                                               
many  military personnel  use  the  ferry, as  well  as how  many                                                               
people use it to transport freight and cargo.                                                                                   
                                                                                                                                
MR.  FIX answered  that  the  Port of  Bellingham  does not  have                                                               
access  to  that  information.     He  said  he  could  get  that                                                               
information from AMHS.                                                                                                          
                                                                                                                                
3:00:03 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  WOOL  asked  for  confirmation  that  the  SOA  funding                                                               
received by Port of Alaska is in the form of lease payments.                                                                    
                                                                                                                                
MR. FIX said that is correct.   He clarified that he believes the                                                               
cost is locked in  until the lease term ends in a  few years.  He                                                               
said there are two sources of  revenue: the lease of the facility                                                               
and  "reimbursable expenses,"  which  he  said include  ticketing                                                               
agents that the port pays on SOA's behalf.                                                                                      
                                                                                                                                
MR.  FIX,  upon  ascertaining   that  there  were  no  additional                                                               
questions, thanked the committee for allowing him to testify.                                                                   
                                                                                                                                
3:01:04 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Transportation Standing  Committee meeting was adjourned  at 3:01                                                               
p.m.                                                                                                                            

Document Name Date/Time Subjects
Presentation - Port of Whittier - 3-19-19.docx HTRA 3/19/2019 1:30:00 PM
3.19.19 presentation.pdf HTRA 3/19/2019 1:30:00 PM
Presentation - Port of Bellingham - 3.19.19.pdf HTRA 3/19/2019 1:30:00 PM
Presentation - Port of Anchorage - 3.19.19.ppsx HTRA 3/19/2019 1:30:00 PM
Supporting Document - Port of Anchorage - 3.19.19.pdf HTRA 3/19/2019 1:30:00 PM